​What does First Homes policy mean for developers?

The new policy requires 25% of affordable housing provided on a site to be First Homes. First Homes must be sold at a 30% discount, with higher discounts set at the Local Planning Authority’s (LPA’s) discretion. This discount is passed on to subsequent buyers via a restrictive covenant, secured by a Section 106 agreement.

While the long-term implications of First Homes are yet to be realised, there is a risk that some developers may have been caught off guard by the change. This is especially the case for those with a planning application that is almost determined but has not yet been formally issued and may now need to be amended to fit the new policy requirements.

It is critical that any developer in this position opens communications with the respective LPA immediately.

The First Homes guidance is a material planning consideration and there may still be good reasons for First Homes not to be obliged. However, if a decision is issued without the LPA considering First Homes and updating its report, it would be at risk of challenge.

We may see a raft of planning decisions being returned to committee over the next quarter, with most developers in this situation being requested to change their plans to meet the First Homes requirement. This will entail the redrafting of Section 106 agreements to include the government’s standard wording.

Maintaining close communication with LPAs is essential for developers as the market seeks to adapt to the model’s long-term impact on the residential market. Indeed, some LPAs may begin seeking to ‘localise’ their approach to First Homes based on emerging evidence.

Camden Council has already passed a planning statement confirming that it “will not seek the inclusion of First Homes in developments in the borough”, due to the need to concentrate on rental delivery.

Stuart Tym is a planning partner at Shoosmiths